Relevant and even prescient commentary on news, politics and the economy.

States Can, In Effect, Make The Treasury Pay For Cost Sharing Reductions

Many have noted that Trump has the strange idea that he can destroy the US health care financing system & people will blame Obama. I actually think he is wrong about this — many polls show that a solid majority of US adults say they will Republicans responsible (yes I know it’s unfair to think they have the responsibility just because they have all the power).

But before that comes the question of whether Republicans can destroy the ACA without repealing the bill. I think there is a weak point in their strategy (and there is no doubt this is the the Trump administration’s strategy). The Federal Government does not regulate the premiums insurance companies may charge if the participate in the exchanges. Even if only very sick people buy insurance on the exchanges, state regulators can allow insurance companies to make a profit by charging gigantic premiums. If only very sick people with income less than 4 times the poverty line buy insurance on the exchanges, then the Federal Government will pay the huge increase in premiums due to adverse selection. I don’t see any way the Trump administration can stop this without changing the law (or how they can change the law having repeatedly failed).

Already states including Oregon, California and Alaska have allowed insurance companies to raise premiums to compensate for Trump’s decision to welch on CSR payments (who would have thought Trump would refuse to fork over money that is owed ???). In particular, they are allowing increases of the premium on silver plans — the premium which determines the subsidies.

I should cite @xpostfactoid https://twitter.com/xpostfactoid who has been making this argument on Twitter.

I don’t see a limit on what state insurance commissioners could do if they decided to play hard ball. In particular, they can allow gigantic premiums without hurting people with income over 4 times the poverty line if the market segregates and some insurance companies sell only on the exchanges (to people getting subsidies) and some only directly (setting market insurance rates).

What if a regulator approved a premium of $ 1,000,000 a month ? This would create no problem for people with income under four times the poverty line — they would pay the same function of their income as now and the Treasury would pay the rest. No one who didn’t get a subsidy would come close to the exchange (or that company which is required to charge the same if it sells directly to prevent blatant fraud). Now the insurance company wouldn’t be able to keep the money — the minimum medical loss ratio of 80% means they get only 25% what health care providers get. However, unless I am confused, the excess is sent to policy holders not the Treasury.

I may be confused, but I think the only things which has been preventing this raid on the Federal Treasury are norms of fairness and a desire to not inconvenience unsubsidized upper middle class consumers by forcing them off the exchange. I’d guess the second factor is more important.

But if the alternative is a collapse of the individual market *and* Trump is, as usual, ignoring norms by not paying what is owed, then I think neither barrier will hold.

I am sure they won’t go to the blatant million dollar raid on the Treasury. But I am also sure that state regulators can (and some will) make the Federal Government bear more than 100% of the cost of Trump’s stunt.

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They are monsters

They are monsters

The President and his GOP majorities in Congress are monsters. As one commentator on NPR put it yesterday afternoon, the President’s default mode is to toss an armed hand grenade into a room in order to create chaos.  He can then pick out the most vulnerable, and use that leverage to enter into a win-lose deal.
Meanwhile, having been emboldened by the 2011 Debt Ceiling Debacle, the Congressional GOP majorities, who haven’t been able to legislate affirmatively, have become specialists in taking hostages and threatening to shoot them unless their agenda is enacted.
Trump and the GOP Congress combined have, as of this morning taken at least four hostages:
DREAMers – the DACA program is being terminated. After an initial claim that a deal had been made to protect young people who had been brought to the US as children and know of no other home, the malAdministration is now taking a hard line, refusing to protect the nearly 1 million enrollees from deportation unless it gets its entire immigration policy enacted.

SChip recipients – this program, which provides medical insurance coverage for over 8 million  lower income children, was allowed to expire on September 30.  Despite assurances from the Congressional GOP that it would be re instituted promptly, nothing has been done.

Puerto Ricans – Unlike Texas, Louisiana, and Florida, which are GOP majority states, the malAdministration never provided prompt aid to the over 3 million Puerto Ricans, and is threatening to withdraw the aid before basic services are restored.

Recipients of Obamacare subsidies – the malAdministration is refusing to make subsidy payments under the ACA to insurers who enroll those who have less than 2.5 times the income of the Federal poverty level, which includes about 7.5 million people who have enrolled under Obamacare.

That’s a total of close to 19,000,000 hostages.

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Healthcare News; ACA and CHIPs

Trump’s Healthcare Executive Order

Trump Signs Executive Order relaxing ACA health insurance rules. About a week or so ago, I had read this elsewhere, mentioned it, and was told there was no way this would happen. Similar to the three attempts to defund the ACA, Trump is doing what he says the Senate could not do and that is to take healthcare insurance away from the citizenry.

More of Trump’s Executive Order down the page.

Children’s Health Insurance Program

Also if you did not know this, the Children’s Health Insurance Program is being held hostage by the House. Rather than pass a clean bill, the House Republicans added provisions to the passage of new funding. 2017 CHIP Program funding was used up during the time period when Republicans were spending inordinate amounts of time trying to defund the ACA rather than attending to other needs of the country. Some states such as Minnesota have already run out of funds to pay for the 9 million children in the US who are dependent on this program; however, nothing appears to get in the way of the House working on a Tax Reform Budget Resolution giving $billions to 1% of the households making >$500,000 annually.

One provision put in place by Michigan Congressman Fred Upton is nonsensical and strictly for show. Mind you, Fred Upton was one of two Congressmen who tampered with the Risk Corridor Program causing premiums to rise for those in the individuals market place with incomes > 400%, Coops to go bankrupt, insurance companies to lose money, and insurance companies to withdraw from the exchanges. Today Mr. Upton proposes to increase Medicare payments for those making >$500,000 annually saying it will help offset the cost of CHIPs, these oldsters can afford it, and if they do not like it . . . do not sign up for Medicare.

Upton’s statement is cold hearted and mean except for the extra $135/ month means testing the “few” would endure. In the US there is ~1 million household with incomes in excess of $1 million annually. Few of them are old enough for Medicare and the return from the Republican proposed tax reform would more than outweigh the additional $135/month.

The Impact of Trump’s Healthcare Executive Order

President Trump’s Executive Order “directs the departments of Treasury, Labor and HHS to consider expanding healthcare coverage through low-cost, short-term health plans that are exempt from Affordable Care Act insurance market rules.” The plans would:

• Be Short Term and up to 364 days as opposed to the ACA’s 90 day limit.

• Would not have to comply with the 10 categories of minimum essential benefits or accept all applicants at the same rates without regard to pre-existing medical conditions.

• Expand access to so-called association health plans allowing employers to band together in healthcare plans and cross state lines.

• Allow the expanded association plans to market to individuals across state lines.

More than likely, the impact of the Executive Order will drive up premiums for those left in the ACA, increase premiums for those with pre-existing conditions, and increase premium costs for older citizens. Much of the increase could be covered by ACA premium subsidies; but, those with incomes > 400% FPL (~10 million) in the individuals market would bear the full cost increase.

Kaiser’s Larry Levitt said; “ Association plans exempt from the ACA can cherrypick healthy people and make coverage unaffordable for those with pre-existing conditions. Insurers will leave the ACA marketplaces as soon as they can or hike premiums a lot.”

The only thing standing in the way of Trump’s Executive Order “easing the ACA’s statutory insurance market rules” from taking place is the legal challenges. As one legal expert posited; “I do not believe you can solve this problem without changing the law. It has to be done by statute, not regulation.”

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Trump Ends CSR Payments Immediately

According to Modern Healthcare:

“In a brash move likely to roil insurance markets, President Donald Trump will ‘immediately’ halt payments to insurers under the Affordable Care Act.

Before sunrise Friday morning, Trump went on Twitter to urge Democrats to make a deal:

‘The Democrats ObamaCare is imploding, massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!’

The Department of Health and Human Services had made the announcement in a statement late Thursday. ‘We will discontinue these payments immediately’ said acting HHS Secretary Eric Hargan and Medicare administrator Seema Verma. Sign-up season for subsidized private insurance starts Nov. 1, in less than three weeks, with about 9 million people currently covered.”

This could be devastating to those with incomes less than 250% of the Federal Poverty Limit. It is a direct attack on US citizens by a president who can not get his way politically and is meant to punish citizens and politicians alike for not following his dictates. Let me assure you, the ACA was not imploding and most of the cost issues with it were caused by Republicans such as former Alabama Senator Sessions and Michigan and Colorado Representatives Upton and Kingston tampering with the Risk Corridor Program.

However, what will happen is the differences will be picked up by increases in premium subsidies as I have said previously for those in this category of 138% to 250%. Indeed as the CBO has pointed out, it becomes cheaper in some cases to bump up to a Gold plan for some. See Tables 1 and 2. Net cost of the ACA increases by $31 billion over 10 years.

Trump asserted: “Obamacare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves.”

The only thing broken today is the Presidency as it is occupied by a madman. One has to wonder if this is Trump’s last hurrah before indicted.

At this time, I have no polite words I can print on AB.

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The Tax-Cut Framework Won’t Create Jobs and Digs the Inequality Ditch even Deeper

The Tax-Cut Framework Won’t Create Jobs and Digs the Inequality Ditch even Deeper

Marcus Ryu, a self-described Silicon Valley entrepreneur who created, with others, a company now worth $5 billion on the New York Stock Exchange, argues in today’s Op-Ed section of the New York Times that “Tax Cuts Won’t Create Jobs“, NY Times (Oct. 9, 2017), at A23 (the title in the digital edition is different from the print title:  Why Corporate Tax Cuts Won’t Create Jobs).  He is right.

The tax cuts proposed in the framework set out by the Trump administration and Republican leaders in Congress claims to be pursuing economic growth that will benefit ordinary people (Trump’s purported base).  These claims are based in part on claims that  U.S. taxpayers (individual, corporate and individual who owns businesses through partnerships) are much more heavily taxed than taxpayers in other advanced countries.  Trump often points to the statutory tax rate for corporations (35%), which is higher than the statutory rate in most other advanced countries. But Trump usually ignores the fact that the vast majority of corporations (including very profitable U.S. multinationals) pay no or much lower taxes, in part because of the many loopholes and deductions that reduce the income that is taxed.  When one considers the nation’s GDP and the percentage of GDP paid in taxes, it is quite clear that the U.S. is actually one of the lowest taxed of developed countries, which often have income taxes, corproate income taxes and value-added taxes (which the U.S. does not have), as well as specialty taxes such as financial transaction taxes (which the U.S. does not have).  See, e.g., Business Insider, Is the U.S. the highest taxed country? (Sept. 6, 2017).

“[T]he most comprehensive measure by which to judge Trump’s claim, combining corporate and individual taxes paid, is tax burden as a percentage of gross domestic product. It compares how much money in a country is put toward taxes with the economic output of the country.  By this measure, the US has the fourth-lowest tax burden of any OECD country, with only South Korea, Chile, and Mexico ranking lower.” [emphasis added]

Trump has claimed that the proposed cuts in the Trump tax-cut “reform” framework don’t benefit the wealthy and don’t benefit him but are for the middle class and those with less wealth and income.  The only way that claim would work would be if tax cuts that are clearly targeted at the rich (elimination of the estate tax, elimination of the AMT, drastic cut in the rate at which wealthy partners pay taxes on partnership income shares, drastic cut in the corporate tax rate  when most of the benefit of tax cuts to corporations is used to pay dividends or do share buybacks for the wealthy managers and shareholders) had such a dramatic impact on overall economic growth and on sharing of the benefit of the tax cuts with ordinary workers that it made up for the fact that almost all of the benefit goes directly to the very wealthy and almost all of the negative impact (via additional borrowing and deficits) will result in fewer benefits from the poor.  That positive balance is so unlikely from these tax-cuts-for-the-rich that they appear to be just another of the many Trump lies intended to mislead the American people.  See, e.g., Business Insider, Trump tax reform plan just got its first brutal review showing how it would benefit the rich and almost no one else (Sept.  2017) (noting that “Americans among the top 1% of earners would see the bulk of the plan’s benefits, while lower- and middle-class Americans — even most upper-class people — would see few benefits,” citing the Tax Policy Center’s study of the framework).

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Social Justice: Debt, Solidarity or Care?

by Peter Dorman (originally published at Econospeak)

Social Justice: Debt, Solidarity or Care?

Mozi: scholar and activist
 

How do we think about the obligation of social justice?  The dominant American political culture is based on individualist values: you have a right to do whatever you want, and the main problem is how to prevent you and other rights-bearing individuals from getting in each other’s way.  Without extra considerations, social justice in such a universe is a matter of taste and inclination, which is to say charity.  You offer help to others when you feel like it.

But there is an important extra consideration, debt: our freedom in an individualist world is constrained by obligations to repay the debts we have incurred.  This may result from a purely financial transaction like a mortgage or a student loan, but we also recognize what might be called social or moral debts, where one person has benefitted at the expense of someone else and therefore owes compensation in return.  This might not be recognized in a court of law, but it makes an ethical claim that can cause people to feel a sense of obligation.

The you-owe-it-to-them argument is used on behalf of coffee-growers, for instance.  Those on the sipping end of the industry, when they hear stories about how hard these growers work and how little they get for it, rightfully feel obligated to go out of their way to make amends.  They buy fair-traded beans and patronize cafes that share, or seem to share, these same values.  If you benefit by drinking, you are indebted.

Ta-Nehisi Coates, who I discussed in an earlier post, strongly pushes this framing of racial justice in America.  White people benefitted from centuries of un- and underpaid black labor, and from racial domination in general, and in this way they have accrued an immense debt.  Justice will not be achieved until the debt is acknowledged and paid back.

In fact, the “white privilege” language used to analyze racial inequality implicitly draws on this same notion of debt obligation.  Inequalities are assumed to all take the form of zero-sum relationships, where some (whites) have more because others (blacks) have less.  Thus the difference in outcomes can be understood as a debt that the better-off owe to the worse-off.  It’s politically effective insofar as it appeals to this deep theme in our culture, justice as the retiring of debts.

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Which Senator Has Done the Most for World Peace ?

Many US Senators have contributed to preserving the peace. I am not a historian, but I understand that many admire William Fullbright. I personally think very highly of Ernest Gruening who tried to save the US from the Tonkin Gulf resolution and our involvement in the war in Vietnam.

However, I think it is now clear that the honor belongs to Senator Robert Corker (R-Tenn). Sen Corker is a respected and experienced statesman not prone to impulsive action. But more importantly, he controls no nuclear weapons.

Any day Trump spends insulting Senator Corker is a day he doesn’t get around to insulting Kim Jong Un who is a depraved and spoiled dictator with nuclear weapons.

I ask concerned citizens to help Senator Corker keep President Trump busy. “adult day care center” was enough for us to survive Sunday, but we can’t expect Senator Corker to bear the whole burden While Trump has a skin as thin as a DNA molecule (that’s thin) he also has the attention span of a meth addled gnat. It is our duty to work together to keep Trump pissed in our time.

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Part of Patriotism is Paying Taxes

Part of Patriotism is Paying Taxes

As Americans, we pay taxes to allow our government to support important activities that we as individuals or individual businesses either can’t do at all or can’t do as successfully.  Both individuals and businesses benefit from government, so that paying taxes is a wonderful exercise in patriotism.

For individuals, the idea of paying taxes as patriotism may be obvious to many of us, because we think that taxes are an obligation of citizens to support and pay for the many things that the government does that we cannot do ourselves, from running a military defense system to supporting basic research into diseases, helping people and cities and states hit by natural disasters (like Texas and Florida and Puerto Rico), supporting education and research that leads to innovation and economic growth, helping to fund changeovers from dying industries like coal to new and growing industries like solar and wind, preserving areas of public lands for the public rather than allowing them to be decimated by private industry and fossil fuel extraction, preventing huge multinational companies from gouging consumers or polluting our water, land, and air, and the many other things that the government does for the benefit of all Americans.

But the far right in this country has been preaching the opposite for years.

  • There’s a good bit of hypocrisy there, because when Sec. of Health Price (now fired) or current Sec. of Treasury Mnunchin or current EPA Director Scott Pruit wants a comfortable private ride (like Pruitt’s many trips back to Oklahoma to talk to industry magnates one-on-one without any public information, and then de-regulate on their behalf), they love that they can make a slim excuse and take a military jet at the cost of hundreds of thousands of U.S. taxpayer dollars.   Or, like Pruitt, have a “sound-proof room” built for himself (first EPA administrator who thinks he needs it) so he can talk to his industry buddies about how to un-protect the environment without any Americans ever finding out about it.
  • Far right media personalities have made a killing by arguing for tax cuts (that mostly benefit the rich like them) and government shrinkage (of programs that they think they won’t use).
    • Grover Norquist wants taxes to be low because he wants to “shrink the government and drown it in a bathtub.”  That idea has proliferated on the right to many of the programs that are directed to help the most vulnerable amongst us, such as Medicaid, and to programs that exist to help ensure the Americans of all ages and backgrounds enjoy the right to access to health care and decent standard of living in retirement, through Medicare and Social Security. Not surprisingly, Norquist has stated that including a VAT in the U.S. system would be “like shards of glass on a pizza” (see this link) –even though almost every developed country has a VAT as well as an income tax (which is one of the reasons that the comparisons of corporate tax rates is so misleading–it is comparing apples (only an income tax) to oranges (an income tax AND a VAT and usually other taxes as well, such as financial transaction taxes).
    • Rush Limbaugh supports Trump’s tax-cuts-for-the rich ideas.  See “What I was Told About the Trump Tax Plan–and What I Think About It“, The Rush Limbaugh Show (Sept. 28, 2017).  He spouts one falsehood after another about them:  that they are not trickle-down (of course they are), that they aren’t harmful for the poor (of course they are); that they will allow 99% of Americans to file their tax forms on a postcard just because the framework reduces the number of tax rates (absurd:  reducing the number of tax rates  has just about nothing to do with reducing the complexity of the Code for the vast majority of American taxpayers, who already file a simple form because they have mainly wage income that is withheld at the source).  And  no matter how much Rush Limbaugh claims that reducing the corporate tax rate, creating a low tax rate for partnership pass-through income, getting rid of the estate tax and getting rid of the AMT aren’t benefits for the rich (because, he says, Trump has insisted that the changes aren’t supposed to benefit him), the fact is that they are benefits for the rich and the Trump clan clearly will especially benefit, probably to the tune of hundreds of thousands annually and billions upon Trump’s death.  Limbaugh is quite simply just plain wrong.  Because, you see, although rates matter (and we should have a top tax rate much HIGHER than our current top tax rates), the changes that the GOP Six are proposing in the framework are specifically intended to, and do, provide enormous tax cuts to the ultra wealthy.  That’s because the marginal statutory rate is just one piece–the real question is what gets taxed, i.e., how is the “taxable income” amount calculated and what special loopholes are built in to benefit the rich (like the 25% partnership pass-through rate).

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Right Wing Propaganda Tank IPI Likes the Trump Tax-Cuts-for-the-Rich “framework”

Right Wing Propaganda Tank IPI Likes the Trump Tax-Cuts-for-the-Rich “framework”

There’s no surprise here.  The Institute for Policy Innovation (IPI) is a right-wing “think” (i.e., propaganda) tank that has consistently argued for tax policies that favor multinational corporations and the wealthy.  So IPI has a posting on Sept 29 that is supportive of the so-called “tax reform framework” put out by the Trump administration.

As an earlier post noted here, the Trump framework is a wish list for the wealthy, providing one tax cut for the ultra rich after another:

  • elimination of the estate tax (that only affects the heirs of estates worth more than $11 million);
  • territoriality (that advantages multinational corporations that actually operate from the U.S. but claim headquarters in low-tax jurisdictions);
  • a flat 25% rate on “pass-through income” that gives almost a 15% rate cut to wealthy owners of partnerships in the real estate, joint venture, oil and gas and other businesses (and affects very few true small business owners whose effective tax rate is already no more than 25%, if that much);
  • elimination of the top rates on the progressive individual rate structure (reducing the top rate from 39.6% to 35% (or less));
  • reducing the statutory rate for corporations to a low 20%, when corporations already pay much much less in taxes than they have generally paid under the income tax system while making record profits and paying their key managerial personnel the kind of salaries and percs that have exacerbated the increasing income inequality gap in the U.S.;
  • elimination of the Alternative Minimum Tax (AMT), a provision that was enacted to ensure that wealthy taxpayers are not able to use so many loopholes and special provisions that they escape taxation altogether on their income (the elimination of the AMT being a pro-wealthy tax cut that ordinary folk in the lower two-thirds of the income distribution will benefit not one whit from); and
  • permitting immediate expensing for five years of equipment and similar expenditures by businesses (another provision that will allow mega corporations to make even more profits that can be shared–through bonuses, higher salaries, and share buybacks with the wealthy managers and shareholders of the enterprise and a provision that runs explicitly counter to the actual economics of the business, in which new equipment stays at close to original value in the early years with wear and tear actually economically backloaded onto the last years of the useful life).

As a result of these provisions, the wealthy who own the vast majority of financial assets (including stock in corporations and partnership interests in real estate and other partnerships) will enjoy hundreds of thousands of dollars of tax cuts.  In fact, the major portion of the tax cuts will go to the very wealthy who need them least.

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Trump’s Inadequate Response to Hurricane Maria and the Posse Comitatus Act

by ProGrowthLiberal  (originally published at Econospeak)

Trump’s Inadequate Response to Hurricane Maria and the Posse Comitatus Act

Credit to Matthew Yglesias for his discussion of the incompetence of Donald Trump as well as the excuses for it from his defenders including:

Officials have also cited the Posse Comitatus Act as a complicating factor that helps explain why Trump was so much slower to dispatch assistance to Puerto Rico than the Obama administration was to send help to Haiti after it was devastated by an earthquake in 2010.

Except this 1878 Congressional Act does not bar the President from calling in the military as Michael Spak and Donald Spak note:

Before 1878, it was common for the United States Army to enforce civilian laws. In frontier territories, the army was often the only source of law enforcement, supplemented by occasional U.S. Marshals. Over time, marshals and county sheriffs regularly called upon the army to assist in enforcing the laws… By the time of the 1876 presidential election, Southern states were reconstituted. Many Southerners opposed both Grant, the outgoing Republican president, and Rutherford B. Hayes, the Republican presidential candidate. Federal troops actively assisted U.S. Marshals in patrolling and monitoring polling places in the South, claiming to be enforcing the federal election laws and preventing former Confederate officers from voting (as was the law at that time). Following bitter election contests in four Southern states, Hayes won the presidency by one electoral vote. Many felt that the federal troops, which supported Hayes and the Reconstructionist Republican candidates for Congress, intimidated Southerners who would have voted for Samuel Tilden, the Democratic candidate. The resulting Democratic Congress was at odds with the Republican President Hayes. In response to what was seen as undue influence over the 1876 election, Congress outlawed the practice of posse comitatus by enacting the Posse Comitatus Act (PCA) (as 20 Stat. 152) as a rider to the Army Appropriation Act for 1880. The act stated: “Whoever, except in cases and under circumstances expressly authorized by the Constitution or Act of Congress, willfully uses any part of the Army or the Air Force as a posse comitatus or otherwise to execute the laws shall be fined under this title or imprisoned not more than two years, or both.” Congressional debates indicate that the PCA was intended to stop army troops from answering the call of a marshal to perform direct law enforcement duties and aid in execution of the law. Further legislative history indicates that the more immediate objective was to put an end to the use of federal troops to police elections in ex-Confederate states where civil power had been reestablished.

In other words, this PCA is an outdated piece of legislation. But there’s more:

Others suggest the act is obsolete and should be repealed because numerous legislative exemptions have eroded the underlying policy and left the PCA a hollow shell. Others insist that although there are many exceptions, the act is essential to bar misuse of the military by civilian authorities and to prevent a military dictatorship from assuming control of the nation through use of the armed forces. Still others argue that the act means only that federal military forces may not be commandeered by civilian authorities for use in active and direct law enforcement as a posse comitatus. If local authorities need military personnel for specialized operations enforcing state laws, it is argued, they may call on the state governor for the assistance of the state National Guard.

There are many exceptions and no one would think giving aid in a time of need endangers either military dictatorship or the misuse of the military by civilian authorities. This pathetic excuse from Team Trump is just another example of how he turns everything into a culture war.

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